Chapter 4: Marketing Research

Who can carry it out?

For Big companies:

1. Syndicted Service Research Firms (free lancer: gather consumer and trade info; sell for a fee)
2. Custom Marketing Research Firms (Hired for specific projects)
3. Specialty-line marketing research firms (provide specialized research services)

For small companies:

1. Engage students and professor with small projects within curricula
2. Use the internet (Google for secondary info)
3. Cheking out the rivals: Visit, call etc as customers

The Marketing Reseach Process

Step 1: Use very clear and objective terms to

1. Define the problem:
2. Define Decision Alternatives
3. Define research objectives

Step 2: Develop the Research Plan

1. Data Sources: whether Primary or Secondary Source of data to be used?
2. Research Approaches:

• Observational Research: Observe consumer behaviour
• Focus Group Research: FGD of customers from desired segments
• Survey research: Design a survey to know from the customers
• Behavioural Data: to know about people's knowledge, beliefs, preferences, satisfaction etc
• Experimental Data: Blind tasting etc

3. Research Instruments

• Questionnaires (dichotmous- yes or no, multiple, likert- 5 choices from strongly agree to strongly disagree, semantic differential- scale with bi-polar words, gap in between to let subject mark, importance, rating scale, intention to buy)
• Qualitative Measures (Shadowing, beaviour mapping, consumer journey, story telling, sentech completion etc)

4. Sampling Plan

• Sampling Unit- Who is to be surveyed?
• Sample Sze: how many to be surveyed?
• Sampling Process: how should be respondents be chosen?

5. Contact Methods

• Mail Questionnaires
• Telephone interviews
• Personal Interviews
• Online Interviews

Step 3: Collect the information

Step 4: Analyze the information

Step 5: Present the findings

Step 6: Make the decision

Measuring Marketing Plan Performance

Sales Analysis

Market Share Analysis

Marketing Expenses to Sales Analysis

Financial Analysis

Profitablity Analysis

Step 1: Identify Functional Expenses

Step 2: Assigning Functional Expenses to Marketing Entities

Step 3: Preparing a Profit and Loss statement for each marketing entity

Forecasting and Demand Measurement

Market Demand= total volume to be bought by a customer group in a defined geographical area in a defined period of time under a marketing program

Market Minimum= Base sales, would take place without any marketing efforts

Market Potential= Upper limit of mkt demand beyond which marketing efforts are useless

Market Senstivity of Demand= Gap between Market Minimum and Market Potential

Two types of markets:

• expansible (company should try to use marketing to increase size of pie),
• non-expansible (company should try to increase its share in the pie)

Market Penetration Index: Ratio of current mkt demand to potential mkt demand

• Low Mkt Penetration Index= substantial growth potential for all players
• High Mkt Penetration Index= Increased cost to atract more customers, price wars, falling margins

Share Penetration Index: Ratio of Current Mkt Share to Potential Mkt Share

• Low Share Penetration Index= substantial growth potential for all players
  High Share Penetration Index= Increased cost to atract more customers, price wars, falling margins

Company Demand: Estimated share of market demand at alternative levels of company marketing efforts in a given time period

Company's Demand depends on how its products/ services are perceived relative to those of the competition. Other things being equal it depends on the size and effectiveness of its marketing expenditure with those of its rivals.

Company's Demand can be measured by using slaes response functions by taking into account its marketing expenditure level, marketing mix and marketing effectiveness.

Company Sales Forecast

It is the expected level of company sales based on chosen marketing plan and an assumed marketing environment. Sales forecast depends on the marketing expenditure.

Sales Quota: Quota of sales set for sales rep, product line or company division.

Comapnay Sales Potential

It is the sales limit approached by company demand as company marketing effort increases relative to that of competition.

Estimating Current Demand

Total Market Potential= total number of buyers X avg quantity purchased by each buyer

(no. of buyers to be estimaed by taking one group and rejecting those who don't fit the bill till the tiem a realistic number is achieved. )

Chain Ratio method: Multiplying a base number by several adjusting percentages

Area Market Potential

Two ways to calculate this:

1. Market Build-up method: Identifying all potential buyers in each market and estimating their potential purchases.
2. Multiple Factor Index Method: Sales oportunity can be claculated by using multiple factors like percentage of disposable personal income, retail sales, total population etc for any particular area as compared with the total market. Weightscan be assigned as per the importance. These can by used by a multifactor index to give indication about the sales opportunity in an area.

Estimating Future Demand

It can be done by

• Survey of Customer's intentions
• Compostie of Sales force opinions
• Expert Opinion
• Pst-Sales Analysis
• Market Test Method